KDDI eyes WiMax investment as growth stalls

TOKYO, JAPAN: KDDI Corp, Japan's No. 2 wireless operator, could invest more in a new WiMax venture in its hunt for new revenues as growth in its voice services slows and it waits to launch LTE technology, its president said.

The company, which competes with sector leader NTT DoCoMo Inc and No. 3 Softbank Corp in a saturated market, hopes demand for high-speed Internet downloads and uploads will help expand its user base.

Japan's first WiMax venture UQ Communications, set up by KDDI and investors such as Intel Corp  and Kyocera Corp, began operations earlier this week to tap new demand. KDDI in May invested 30 billion yen ($312.5 million) in the venture, in which it holds a one-third stake.

"We think of UQ as part of KDDI," President Tadashi Onodera told Reuters in an interview. "We will of course invest more money if necessary."

WiMax has largely lost the battle to be the next generation mobile technology to Long Term Evolution (LTE), favoured by the majority of carriers because it can be build on existing systems.

But KDDI, which will not launch LTE until 2012, believes the WiMax chip is following the same trajectory as WiFi and will eventually be built into laptop PCs as a given, Onodera said.

As more users opt for low-cost basic cellphone plans, average revenue per user of KDDI's voice services will continue to decline for one to two years, he said.

WiMax gives KDDI access to notebook PC users surfing the Internet -- a completely different market from cellphones, he said.

The new WiMax venture will go head-to-head against eAccess Ltd's  data service cards, which will run on networks based on HSDPA -- another high-speed wireless technology.

KDDI has been falling behind rivals in winning new sign-ups less cancellations, and has been forced to slash handset prices by raising subsidies it pays out to phone makers, to battle rising inventory. KDDI will begin its LTE network services two years after NTT DoCoMo's launch at the end of 2010.

"Our objective in adopting LTE is to cut costs," said Onodera, adding that late adoption was not a problem. "Cellphone speed means nothing. Download time is shorter, but you can download more quickly using WiFi for less money."

KDDI also plans to supply a number of new handsets next year using Google Inc's (GOOG.O) Android operating software, Onodera said.

Shares of KDDI fell 1.2 percent, while the benchmark Nikkei average .N225 fell 0.6 percent.